MNB-97-3 April 1997

Fraud and Abuse in Nursing Facilities

The Office of Inspector General (OIG) was established at the Department of Health and Human Services by Congress in 1976 to identify and eliminate fraud, waste, and abuse in Health and Human Services programs and to promote efficiency and economy in departmental operations. The OIG carries out this mission through a nationwide program of audits, investigations, and inspections.

Nursing facilities and their residents have become common targets for fraudulent schemes. Nursing facilities represent convenient resident “pools” and make it lucrative for unscrupulous persons to carry out fraudulent schemes. The OIG has become aware of a number of fraudulent arrangements by which health care providers, including medical professionals, inappropriately bill Medicare and Medicaid for the provision of unnecessary services and services which were not provided at all. Sometimes, nursing facility management and staff also are involved in these schemes.

The government may prosecute persons who submit or cause the submission of false or fraudulent claims to the Medicare or Medicaid program. Examples of false or fraudulent claims include claims for items that were never provided or were not provided as claimed, and claims for services that are not medically necessary.

Submitting or causing false claims to be submitted to Medicare or Medicaid may subject the individual or entity to criminal prosecution, civil penalties including treble damages, and exclusion from participation in the Medicare and Medicaid programs. The OIG has uncovered the following types of fraudulent transactions related to the provision of health care services to residents of nursing facilities reimbursed by Medicare and Medicaid.

Practitioners of medical specialties have been found to misrepresent the nature of services provided to Medicare and Medicaid beneficiaries because the federally funded programs have stringent coverage limitations for some specialties, including podiatry, audiology, and optometry. For instance:

• The OIG has learned about podiatrists whose entire practices consist of visits to nursing facilities. Non-covered routine care is provided, e.g., toenail clipping, but Medicare is billed for covered services which were not provided or needed.
• An optometrist claimed reimbursement for covered eye care consultations when he, in fact, performed routine exams and other non-covered services.
• An audiologist made arrangements with a nursing facility and affiliated physicians to get orders for hearing exams that were not medically necessary. The audiologist used this access to residents exclusively to market hearing aids. In this case, the facility and physicians, in addition to the audiologist, could be held liable for false or fraudulent claims if they acted with knowledge of the claims for unnecessary services.

What To Do if You Have Information About Fraud and Abuse Against the Medicare and Medicaid Programs

If you have information about the types of activities described above, please call 1-800-MEDICARE.